Council approves liquor store budget after much consideration

Published February 20, 2014 at 7:00 pm

The Spring Lake Park City Council approved the 2014 Central Park Liquor budget Feb. 18 after much discussion the last few weeks.
The Spring Lake Park City Council approved the 2014 budget for its municipal liquor store, located at 8101 Highway 65 NE. Photo by Olivia Koester

The budget was scheduled to be approved Feb. 3, but Mayor Cindy Hansen said she could not approve it or recommend its approval as a member of the liquor commission.

“I don’t see where things are being cut,” Hansen said.

The budget was tabled, and the council met to discuss the liquor store in a work session Feb. 10.

The council, with City Administrator Dan Buchholtz and Liquor Store Manager Joyce Swanson revisited the store’s reorganization, which the council approved in 2012.

Reorganization recap

Eliminating positions and slashing salaries saved the city $40,000, according to Buchholtz.

Before the reorganization, Swanson was director of operations. That position was eliminated, and she was demoted to manager. Her salary was reduced from almost $80,000 in 2011 to under $70,000 in 2013. She is slated to receive a 2 percent raise this year, which will boost her annual salary to $70,732.

The former store manager and assistant store manager were encouraged to reapply for one managerial position – assistant manager. Laura Saastamoinen, former manager, was hired as the assistant manager. Her salary dropped from $63,673 to $51,296 in that same two year period. She is also budgeted to receive a 2 percent raise.

The reorganization incurred some costs: Unemployment payments amounted to $10,000 last year, but that line item should disappear in 2014. To keep up with workload, an additional $30,000 was budgeted to pad part-time workers’ salaries. A $2 wage differential for night closers impacts the business, too.

With those added costs, the reorganization brought only half of the savings council expected, but “it was still worth doing,” Buchholtz said. “It still needed to be done.”

But Buchholtz found positives in the store’s finances. Operation revenues were down, which he attributed to smarter purchasing and inventory control by managers. “I think that’s something to celebrate,” he said.

Raymond agreed, stating that the liquor store was doing OK, not great. “The expenses are down, and the profits are up,” he said. “That’s a reflection that things are happening in the right direction.”

Looking forward

The 2014 budget takes into account scheduled road construction on Highway 65 that could make it difficult for customers to access Central Park Liquor. The store budgeted for a 10 percent sales impact.

Additionally, in December, the council agreed to halve the liquor store’s transfer for 2014. Typically, the store transfers $150,000 to the city. This year, Local Government Aid allows the transfer to be reduced to $75,000 so the store won’t be strapped for cash if the construction hurts business.

Buchholtz made comment that perhaps in 2015 the transfer could be built up again, but gradually, a suggestion to which Hansen didn’t take kindly.

“Come on,” she said, raising her eyebrows at Buchholtz.

He explained that additional funds could be used to finance capital improvements that have been neglected for some time. “I think the store could really use a facade improvement,” Buchholtz said, calling the $150,000 transfer an arbitrary sum.

Swanson’s predecessor cut corners when it came to store upkeep, said Councilmember Bill Nash, also on the liquor commission with Hansen and Buchholtz. “He robbed Peter to pay Paul in my opinion,” he said.

The council suggested several cost cutting measures, including accepting fewer credit cards and having managers take turns working the night shift to eliminate that $2 wage differential.

The store paid $29,030 in fees to credit card companies in 2013, about 1.1 percent of its total expenditures.

Raymond suggested Central Park Liquor accept only certain cards, but Swanson said she thought it would drive away customers.

Swanson said she would crunch the numbers, though she didn’t believe it would be a huge savings. It would be more difficult to meet with sales representatives, too. “I know what you’re talking about as far as leadership,” she said.

Raymond also thought the liquor store could generate some extra revenue by selling advertising inside the store, an idea Hansen enthusiastically supported.

Municipal liquor stores statewide

The Office of the State Auditor released a report Jan. 27 detailing municipal liquor store operations’ performance across Minnesota in 2012.

Sales improved statewide, though they were down in Spring Lake Park, Hansen pointed out.

Swanson said it wasn’t fair to use those figures as a measure of current performance since 2012 was the year of the reorganization.

Nash examined the demographics of the 19 cities within the metro that operate municipal liquor stores. Many of the stores are located in more affluent areas and have less competition, he found.